Many SMEs in the manufacturing industry cannot find a successor within their own families, are confronted with the declining interest in starting new businesses in our time, and do not know how to find an external buyer. In this regard, the motto “think about the future early on” is more necessary than ever when it comes to succession planning for one’s own company. The current disruptions in supply chains, the massive increases in material and energy prices, the discussions surrounding the carbon footprint of manufacturing companies, the aftermath of the COVID-19 pandemic, Russia’s invasion of Ukraine, etc. —this list of negative external factors, which could easily be extended, presents additional obstacles to a successful business transfer. As a result, the M&A market is shifting toward a buyer-friendly environment, and risk aversion on the buyer’s side is increasing.
Unfortunately, these real-economy effects outlined above are also leading to a deterioration in key economic indicators (net income, EBIT, liquidity, etc.) for companies in the manufacturing industry, and thus to a reduction in the achievable sale price.
Our Approach
Two Key Pillars
1. Our professional and expert consulting is not limited to simply guiding you through the actual succession or M&A process; rather, we prefer to get involved one step earlier, so to speak: we help you get your company “ready” for the succession or sale process! In doing so, we show you how to “spruce up the bride” to improve the company’s value (income value) and thus achieve a higher selling price. Here are a few brief practical examples:
► Try to view your business from the perspective of a potential buyer: How does the outward appearance of your business or property come across to potential buyers? Does your business have a modern and professional website? How organized and clean is your facility?
► For a potential buyer, “dependence on the owner” (or on individual employees and executives) in day-to-day operations is one of the greatest risks associated with business succession. Therefore, in the lead-up to the succession process, we will always analyze the company’s internal processes together with you. Based on this analysis, we will then develop a concrete action plan that will enable you to restructure, optimize, and clearly document your processes.
► By “smartly” introducing small-scale digital processes (e.g., digital personnel files or a simple automated workflow between purchasing and accounts payable), you not only reduce internal administrative costs but also leave a modern and professional impression on potential buyers.
You should by no means underestimate the impact of such measures on potential buyers, but neither should you overestimate the effort required to implement them. The goal is to implement appropriate and practical improvements to better prepare your company for the sales process and increase the achievable sale price.
2. In our consulting activities, we focus exclusively on those industries in which we ourselves have extensive practical experience. For example, we place a special focus on companies in the steel and metal processing sectors. In this segment, we have proven expertise with medium-sized corporate groups and are therefore thoroughly familiar with business models, supply chains, customer and competitive structures, and production processes. As a result, from day one, you can discuss steel price increases, nickel price trends, delivery times and bottlenecks, full order books coupled with a shortage of skilled workers, and other industry-specific topics with us on an equal footing.
Even for companies whose financial metrics have deteriorated, simply waiting out the crises mentioned above is not a viable strategy. Now, more than ever, a strategic and operational analysis must examine all areas of the company—including the business model, the business plan, financial metrics (especially equity and liquidity), market and competitive positioning, and processes and workflows—to identify weaknesses and areas for improvement. During this analysis, it is important to keep in mind the adage “turn crisis into opportunity”: in times of crisis, supposedly tried-and-true practices can be more easily questioned, necessary changes are easier to initiate, and ideas and innovations are more likely to fall on fertile ground than during periods of growth.
All identified improvement measures must aim to position the company for the future in light of economic change and make it as resilient as possible to current and future crises. In doing so, the timeline of the succession/sale process must be taken into account for each measure, and priority should be given to those measures that have a particularly positive impact on the sale price. With the unbiased perspective of an external industry specialist—in this case, in the steel and metal processing sector—we support you in navigating the complex and time-consuming challenges of succession planning, which are not part of your day-to-day routine.
For more information, please visit our website, where you can also access our free, no-obligation eBook, “Succession/Sale for Companies in the Steel and Metal Processing Industry.”
